In the US, internet-banking customers enjoy cheaper tariffs than those who prefer to use branches. Egg, the direct banking arm of the Prudential, moved some way in that direction last month when it changed its rules so that new savings accounts can only be opened online.
So far, however, the clearing banks appear to have little incentive to cut their charges or improve interest rates for internet customers. This could change later this year with the launch of First-e, an internet banking service. First-e is a "virtual" bank: it has no branches or even call centres. Customers will manage all their banking through the net. In return, First-e plans to reward its customers with the sort of interest rates that most people associate with savings accounts.
First-e is still at the pilot stage, and its managing director, Xavier Azalbert, is wary of making predictions. He admits rates are unlikely to match those at Egg, but they are likely to match or better the best current accounts, such as Citibank, which currently pays up to 3.75 per cent gross.
Whether First-e will succeed depends largely on whether a new bank with no real track record can win customer confidence. So far, internet banking ventures have been either virtual currencies designed only for internet transactions, or simple account- management websites developed by existing banks.
First-e is a real bank and its customers will be relying on it to handle their real money safely and securely. If it does, it will give conventional bankers pause for thought.
First-e: www.first-e.com Stephen Pritchard can be contacted at: Hifirstname.lastname@example.org